Understanding the Benefits of LRS | Global Wealth & Investment Advisory

Considering overseas investment? It’s needless to say that the global markets are offering immense opportunities for the people from all over the world. But navigating them requires clarity and expertise. From luxury real estate to structured offshore investments, a spectrum of international schemes awaits. Each comes with its compliance requirements and strategic advantages.

The right choice can unlock not just financial growth, but also lifestyle privileges and access to global networks. The key lies in informed decision-making, regulations which are guided by precision and foresight. Unlike real estate investment in India, the overseas investment has different scenarios which are simplified by LRS. 

In this regard, let’s understand what LRS is all about. Liberalised Remittance Scheme or LRS, is a foreign exchange policy allowing Indian residents to send (remit) funds abroad for various purposes. This initiative was started by the RBI (Reserve Bank of India) in 2004.

LRS comes with a sole objective to simplify sending money outside India and for overseas investment. This scheme is primarily applicable to the residents of India having valid pan card and with an outward remittance limit of USD 250,000 every financial year.

How the LRS Scheme Works – You Need To Know 

The Tarapore Committee’s recommendations in the late 1990s was the main reason for which the LRS was initiated. There was a proposal related to the ease of regulations on foreign investment, full capital account convertibility and much more. Later, in 2004, the RBI considered converting the capital account via the Liberalised Remittance Scheme (LRS). This liberty allowed the individuals to send up to $250,000 per annum abroad for investment related or any other expenses.

This scheme is regulated under the FEMA (Foreign Exchange Management Act of 1999), which is a kind of international remittance standard for Indians. In the case of a minor, the guardian must sign the LRS Declaration Form. However, it does not include inward transfers, i.e., from abroad to India. This is similar in the case of corporations, firms, partnerships, or HUF.

Benefits Of The Liberalised Remittance Scheme

Here are the few benefits of availing the LRS scheme for remitting purposes. It includes:

Easy Diversification of Investments in Global Markets 

The LRS scheme allows a significant remittance abroad for people to invest eventually in the global spectrum. It includes overseas investment through a lot of factors like Outbound AIFs, NSE Receipts and the Global Access Platform. It’s a kind of encouragement for investing in foreign stocks and real estate.

Easing Medical Aid 

This scheme helps the individuals to fulfil their medical requirements. One can easily transfer money abroad for any medical treatment.

Overseas Education

This scheme is helpful for any kind of payment related to education. Without much hassle, these funds can also be helpful for other family members also. 

Other Maintenance 

For relatives living abroad, this scheme can be used to maintain their living expenses as well. 

LRS is more than just a remittance scheme. It is a comprehensive solution for all the people living overseas and seeking overseas investment. The scheme has made the process of sending funds overseas very easy for education, medical treatment and other purposes including various tax benefits. But, understanding the guidelines and fund restrictions is very important. 

The Liberalised Remittance Scheme (LRS) is everything about unlocking new global opportunities. With Sàwai Capital, one can gain access to structured solutions that make the remittances work smarter for you.

Frequently Asked Questions (FAQ’s)

1. What is LRS?

The Liberalised Remittance Scheme (LRS) by the Reserve Bank of India allows resident individuals to remit up to USD 250,000 per financial year for permitted current or capital account transactions, specially for overseas investment.

2.  Is there any RBI approval required?

For most permitted transactions, no prior approval is required. However, remittances beyond the annual limit or for restricted activities need explicit RBI clearance.

3. Is there any tax implication?

Since October 2020, some overseas remittances attract TCS under the Income Tax Act. Rates vary depending on the purpose.